Over 47% of Purchase Borrowers Received Mortgage Rates Under 4.25% Last Week

Tendayi Kapfidze

Tendayi Kapfidze is Chief Economist at LendingTree. He leads the company’s analysis of the U.S. economy with a focus on housing and mortgage market trends. Tendayi utilizes data analysis to be a resource for both consumers and...

Homebuyers could have seen median lifetime savings of $49,259 in interest on a $300,000 loan by comparison shopping for the best mortgage rates.

June 25, 2019 — Charlotte, N.C.

Each week, LendingTree reports how much consumers can save by comparing rates during the loan-shopping process. We describe these savings in two ways, to provide the most detailed data possible on mortgage rates. The LendingTree Mortgage Rate Distribution details the range of mortgage interest rates on offer. The Mortgage Rate Competition Index is the median spread between the lowest and highest APRs offered by lenders in our marketplace.

For the week ending June 23, 2019, the share of borrowers with rates under 4.25% was slightly more than 47%.

Mortgage Rate Distribution

For 30-year, fixed-rate mortgages, approximately 47% of purchase borrowers received offers of 4.25% or less. That is up from 24.2% of borrowers the previous week. A year ago, no offers were under 4.25%.

Across all 30-year, fixed-rate mortgage purchase applications on LendingTree, 4% was the most common interest rate. This rate was offered to 12.2% of borrowers.

Of 30-year, fixed-rate mortgage refinance borrowers, 52.3% received offers of 4.25% or less, which is up from 16.1% the previous week. A year ago, no refinance offers were under 4.25%.

Across all 30-year, fixed-rate mortgage refinance applications, the most common interest rate was 3.875%, offered to 12.1% of borrowers.

Mortgage Rate Competition Index

Across all 30-year, fixed-rate mortgage purchase applications on LendingTree, the index was 1.04, up from 1.00 the previous week.

How big of a deal is it to get a mortgage APR that’s 1.04 percentage points lower than the competition? Over 30 years, that could translate to $49,259 in savings on a $300,000 loan (see Mortgage Savings Tracker graphic below).

The index was wider in the refinance market at 1.18, down from 1.33 the previous week. Refinance borrowers could have saved $56,574 by shopping for the lowest rate.

Other findings

The distribution of rates — and, as a result, the Mortgage Rate Competition Index — has widened as rates increased, reflecting how mortgage lenders may change the rates at which they can offer consumers loans, depending on their unique business circumstances.

Rate Distribution – Purchase

Rates 4.25% and below – Purchase

Mortgage Savings Tracker

Mortgage Rate Competition Index

Want to learn more about what economic factors influence mortgage rates?

The LendingTree Mortgage Rate Competition Index is a proprietary measure of the dispersion in mortgage pricing. It measures the APR spread of the best offers available on LendingTree relative to the least competitive (i.e., the highest) rates on 30-year, fixed-rate mortgages. Our research shows that mortgage rate competition varies with the financial and operational measures of activity in the mortgage markets. More details on the index are available in a white paper on LendingTree’s website.

How the index is formulated

A mortgage shopper enters their information on LendingTree.com. They input loan variables, including the proposed amount and down payment, and property variables, including property type and location. Using our proprietary algorithm, LendingTree matches borrowers with lenders based on the criteria they provided. Interested lenders return a rate and fee offer. For our index, we combine the rate and fees into an APR and calculate the spread as follows:
The spread is the difference between the highest and lowest offers, in this example, 4.62-4.21=0.41. We repeat this calculation across 30-year, fixed-rate mortgage loans that week and then find the median of the individual spread, which is our index value for that week. This is done separately for the population of purchase and refinance loan requests.